US election fever brings on US-China trade, currency disputes

ELECTION fever in the United States appears to be escalating trade hostilities in the Democrat-led US Congress against supposed Chinese currency manipulation ahead of the November 2 mid-term which risks unseating the incumbents and putting the opposition Republican party in office.

The US has filed two cases against China at the World Trade Organisation, one asking for dispute settlement consultations regarding China's imposition of anti-dumping duties and countervailing duties on imports of grain oriented flat-rolled electrical steel (GOES) from the United States, reported American Shipper. The other seeks WTO consultations on China's discrimination against US suppliers of electronic payment services.

Xinhua reported the attack on Beijing's currency position in the light of Democrats' fear of November mid-term election losses. Such were the suspicions of Chen Fengying, director of the Institute of World Economic Studies affiliated with the China Institute of Contemporary International Relations.

The US complains of China's Ministry of Commerce investigations last year on grain-oriented flat-rolled electrical steel from the United States and its imposition of anti-dumping and countervailing duties, saying American steel had been subsidised and then dumped on the China market below the cost of production.

"China's antidumping and subsidy determinations appear to violate numerous WTO requirements," said the Office of the US Trade Representative.

Washington says Beijing initiated both investigations without sufficient evidence, failed to objectively examine the evidence, failed to disclose "essential facts" underlying their conclusions, failed to provide an adequate explanation of its calculations and legal conclusions, improperly used investigative procedures, failed to provide confidential summaries of Chinese submissions and included US federal and state programmes that were not identified in the notice of initiation of the countervailing duty investigation.

China will appeal to the World Trade Organisation for the US misconduct and induce countervailing tariffs on US exports, said Ni Feng, deputy director of the Institute of American Studies under the Chinese Academy of Social Sciences (CASS).

The Chinese government has to "hope for the best and prepare for the worst," said CASS's Institute of Finance researcher Cao Honghui, who said China's currency rate is not the cause of the US trade deficit and not related to the US domestic unemployment, according to Xinhua.

"Many US-imported products from China are not direct competitors in the US since they do not have counterparts who also produce the same products. To the US, importing less of these products from China means buying more from other countries," said Mr Cao.

Thirty-six US farm and business groups, including the US-China Business Council, the American Soybean Association and the American Meat Institute, recently urged in their letter to US representatives that Congress should not pass legislation on punitive duties on the Chinese goods if Beijing does not appreciate its currency at a faster pace.

China is the third largest export market of the United States. As of July 2010, US export to China grew 36.2 per cent, 15 percentage points higher than the increase of the import, said the Xinhua report.

On the other hand, China is the largest holder of US Treasury debt, amounting to a total of US$846.7 billion, according to the US Treasury Department.
(Source:www.schednet.com)